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Big Changes at Credit Bureaus Could Improve Scores

Big Changes at Credit Bureaus Could Improve Scores

After negotiating with New York’s attorney general for months, the top three credit reporting agencies have reached an agreement that applies throughout the nation. The bureaus plan to enact major changes to the ways that they record late or unpaid bills. They will also make it less difficult for Americans to correct errors on credit reports.

Medical Bills

One of the most important changes applies to debt that people owe to hospitals and other health care providers. After it goes into effect, medical facilities will need to wait six months before they can report unpaid bills to credit agencies. The bureaus must also delete negative data about medical debts that were paid by health insurers.

This portion of the agreement will benefit many Americans because it prevents harm to their credit scores when insurance companies send late payments. People encounter this problem when they have disputes with their insurers about coverage of specific treatments. The six-month period also gives patients more time to pay unexpected bills after they suffer injuries or illnesses.

Reporting Errors

Another upcoming improvement will change the way that credit bureaus handle mistakes. The agencies plan to devote more resources to correcting false information, such as data on debts associated with the wrong individuals or “unpaid” bills that were actually paid late. Staff members will carefully assess specific complaints rather than using an automated process.

This development could make a huge difference for many people. The federal government estimates that about one-quarter of Americans have credit records that contain at least one mistake. When the public complains, reporting agencies often merely ask creditors or service providers to confirm the information that they previously reported. The new policy will give people a better chance to fix such errors.

Although they admit that mistakes are made, credit bureaus contend that serious errors remain rare. A recent government study revealed that many inaccuracies have little impact on scores, according to the Washington Post. Nonetheless, an estimated 10,000,000 Americans pay extra for various services due to these errors.

Free Reports

A related improvement will give some citizens free access to additional credit reports. Current policies require the bureaus to supply each person with a single no-cost report every year. After the agreement goes into effect, they’ll offer an extra free report to anyone who complains about a mistake. This will make it easier to confirm that errors have been fixed, according to the Detroit News.

Excluded Debts

Some Americans are happy to learn that this agreement banishes certain types of debt from credit histories. Most public fines will no longer appear on reports; a couple of examples include late charges at libraries and tickets for parking violations. The agencies plan to focus on recording debts that are based on legal contracts.

A number of states prohibit payday loans or cap their interest rates. However, this doesn’t always prevent businesses from illegally lending money and reporting unpaid loans. The upcoming changes will stop credit bureaus from recording debts to illegal lenders, according to the attorney general’s office. However, this part of the agreement only applies to New York.

Media Campaign

Finally, the agreement requires credit bureaus to boost public awareness of reporting errors and corrections. They will use the media to inform Americans about these changes and remind people to request free reports, according to CBS News. The bureaus also plan to put links to AnnualCreditReport.com on their websites’ homepages.

High Praise

An assortment of organizations and officials praised New York Attorney General Eric Schneiderman for working with the bureaus to reach this agreement. Representatives of the New Economy Project, New York City’s Consumer Affairs department and the National Consumer Law Center have applauded his efforts. A state assemblyman from the Bronx called the agreement “a major victory” and said that it would greatly benefit the public.

Some of the changes will occur within weeks, while others could take several months or up to three years. Nonetheless, these improvements have the potential to enhance the lives of many Americans. Better credit scores give people greater access to housing, insurance, loans and even employment. They also reduce the interest rates and premiums that individuals pay.

Need Help with Your Credit?

Are you currently in a struggle to improve your credit score? Or are debt collectors annoying you and implementing unfair collection practices?

If you need help in improving your credit standing or fighting off abusive and harassing debt collectors, call us today at 866-4-WAY-OUT, that’s 866-492-9688. You can also leave us a message to schedule a FREE 15-minute phone consultation.

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